Guaranty Bank and Trust Co. in Denver is being sued for allegedly assisting a former money manager, Will Hoover, in swindling his customers out of nearly $12 million, according to the Rocky Mountain News.
The 43 plaintiffs are suing for triple damages and reimbursement of legal expenses under Colorado's consumer fraud law, according to the paper. They claim that Guaranty should have detected the fraud by Mr. Hoover, who wrote $11.9 million of bad checks between 1999 and 2002.
He is serving a 100-year sentence in eastern Colorado's Sterling Correctional Facility for 44 counts of racketeering, theft, and securities fraud, according to the Rocky Mountain News.
The suit, filed last week, alleges that Guaranty kept mum because it collected $20,000 of penalty fees on more than 1,000 bad checks. Miles Gersh, an attorney for the plaintiffs, told the paper that the bank lent Mr. Hoover money during that time to cover the bounced checks.
According to the suit, Guaranty's former chairman, Martin Moore, refused to alert regulators about the bounced checks because Mr. Hoover was an important source of referrals.
The $809 million-asset Centennial Bank Holdings Inc. in Fort Collins acquired Guaranty late last year.
